As it is known, Y Combinator is the strongest startup accelerator in the world. If it is so strong, many startups strive to be a part of it, including both strong and weak ones. How Y Combinator became a mecca for startups is a separate question. However, how they manage to filter out a hundred worthy startups from tens of thousands of various applications is no less interesting.
The final interview at Y Combinator lasts about 15 minutes. During this time, founders are asked many questions rapidly, each of which they must respond very quickly. I googled and found a long list of questions asked during the interview. From this list, the most relevant questions for many startups were selected.
So, the key questions from an investor that you should be prepared for are:
- What’s new about what you’re doing?
- What do your users want the most?
- How are your users currently solving their problems?
- What sets you apart from existing solutions for user needs?
- What would motivate a user to try your service?
- What might discourage a user from trying your service?
- How many people are in your target market? How many billions of dollars is this market worth? How fast is this market growing?
- Who are your competitors? Who could become your competitors?
- Which competitor do you fear the most?
- How many users do your competitors have? What is their revenue?
- How much time and money will your users spend before switching to your service?
- What have you done that is impressive and can leave an impression on us?
- Tell us something surprising that happened in your startup.
- What is the biggest mistake you’ve made?
- What unique abilities do you have in your field?
- Who will be your next key hire?
- What will be your biggest challenge in six months?
- How will you become a billion-dollar company?
What’s new about what you’re doing?
If there’s an old problem in an old market that you plan to solve in an old way, chances are it either already exists, nobody needs it, or it doesn’t make financial sense. What changes are you utilizing to solve an old problem in a new way? Or how did you discover a new problem that previous generations of entrepreneurs haven’t had a chance to solve yet?
What do your users want the most?
Every person has a limited budget of time and money. They spend it on what they consider important to them. They won’t pay for your product or service if you don’t address their most crucial needs. They will always have more important things to spend their resources on. What grounds do you have to claim that you’re not focusing on something trivial and unimportant?
How are your users currently solving their problems?
To fit into our users’ limited budget of time and money, we need to displace something from that budget. We can’t imagine people setting aside money in an envelope, expecting that someday we’ll come along and they’ll give us that money. For people to start using our product, they need to stop using something else. What are they currently doing and using? We need to know this.
What sets you apart from existing solutions for user needs?
I believe answers like “a more user-friendly interface” or “we have everything in one place” are not the most convincing responses. Our distinctiveness is our superiority. Superiority is not just a checklist of features compared to competitors. It’s one critical consumer parameter where we excel over competitors—faster, cheaper, or more for the same price.
What would motivate a user to try your service?
Seeing your advertisement or visiting your website doesn’t guarantee a person will try your service. You must capture them at the right moment or make an offer they can’t refuse. How will you break the initial barriers of skepticism and inertia? How will you prompt the user to take action right now?
What could deter a user from trying your service?
To answer the previous question about what motivates them to use your service, you need to have a clear understanding of the reasons why they might postpone this decision. You can’t fight an enemy you don’t know. The better you understand what holds them back, the more successful you’ll be at pushing them forward.
How many people are in your target market? How many billions of dollars is this market worth? How fast is this market growing?
Here, you need to be knowledgeable about the numbers. Responses like “it’s a current trend” or “everyone wants it” and other cognitive discussions are unlikely to suffice in this context. The main reason a startup won’t become a unicorn is a small market. It’s more advantageous to have a large market and a weak [for now] product than a polished product in a small market.
Who are your competitors? Who can become your competitors?
Returning to the topic of limited budgets of time and money, we remember that people need to stop using something in order to start using our product. This means we always have a competitor – someone they have to stop using. It doesn’t necessarily have to be a direct competitor. It could be an indirect competitor that satisfies the same need in a different way, or an entirely different product for a different need that is more important than what we offer. A competitor can be not just a specific service, but also the “conventional way of doing things.” It’s quite important to consider which major or related players might become your competitors when you or your target market starts growing.
Who do you fear the most among your competitors?
It’s always important to identify your main competitor, the one you intend to compete against. If you fear no one, either you are overestimating your capabilities or the size of the target market where even a strong competitor couldn’t emerge.
How many users do your competitors have? What is their revenue?
Assessing the market based on the size of your competitors provides a more accurate evaluation of your target market than abstract figures from reports. For example, the food delivery market may be massive in size, but the majority of the money is made by the top five chains. Are you planning to defeat these chains? If not, including their revenue in the overall market volume would give us inflated expectations.
How much time and money will your users spend before switching to you?
The volume of time and money spent on competitors is the best indicator that there is money in the target market. If people are only spending minutes and pennies on competitors, what grounds do you have to expect that they will start spending hours and dollars on you?
What have you done that is impressive and can leave an impression on us?
If you haven’t done anything impressive before, why would you be able to do something impressive in the future? Becoming a unicorn is not just about routine work, but also about making impressive breakthroughs in acquiring customers and capturing the market. How impressively do you think and make strategic moves?
Tell us something surprising that happened in your startup.
If you haven’t encountered anything surprising, it’s likely that you aren’t keeping your eyes and ears open to new and surprising opportunities. No initial startup idea is good enough to reach unicorn status without changes. This idea must evolve. To do that, you need to be able to see and be amazed by things you didn’t expect, and use them to drive changes in your initial idea.
What is the biggest mistake you’ve made?
Another reason for changing your startup is to rectify inherent flaws. Rectifying wrong assumptions embedded in the initial startup idea. These mistakes are always present; otherwise, why change? If we don’t acknowledge our mistakes and persistently focus on one point, we will never evolve. The ability to see mistakes, acknowledge them, and draw conclusions is a chance for changes in the right direction.
What unique abilities do you have in your field?
Having a good idea is not enough. The success of a startup is 10% idea and 90% execution. This means not only having the best idea but also superior execution. The quality of execution does not depend solely on the amount of money but on the quality of the founders. Superheroes defeat villains. Founders who possess superpowers and know how to apply them in the right direction become unicorns.
Who will be your next key hire?
The answer to this question demonstrates two things: the competence where founders feel their weakness and the direction they consider the most crucial.
What will be your biggest problem in six months?
Today, you should be working on solving the problem that might arise in six months. If you can’t predict your future problems, you can’t plan your activities effectively. Consequently, you’ll constantly encounter bottlenecks that impede your growth. Stunted growth means there’s a chance you won’t have time to become a unicorn.
How will you become a billion-dollar company?
Since this question requires a quick response, the answer should be concise and clear. Saying, “I have a business plan with all the numbers in Excel” is unlikely to be a good answer. Similarly, saying, “You will give us money, and that’s how it will happen” is not sufficient. The investment of a few hundred thousand dollars from Y Combinator is not enough to build a billion-dollar company. There needs to be another simple, short, and understandable answer. What is it?